Alnylam second quarter revenue decreases to $20.6 million

Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, today reported its consolidated financial results for the second quarter 2011, and company highlights.

"Alnylam remains focused and committed to the advancement of RNAi therapeutics as a whole new class of innovative medicines. Our progress in the first half of 2011 is exemplified by the continued advancement of our clinical pipeline. In this regard, we believe we have achieved important objectives in recent months with both our 'Alnylam 5x15' programs as well as our partner-based programs," said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. "All told, our focus is to drive RNAi therapeutics through clinical trials and ultimately to the market, and with several important milestones still ahead in the near term, we look forward to reporting on our progress in the second half of 2011 and beyond."

"Specifically in the second quarter and recent period, we presented data from our ALN-VSP Phase I study at ASCO showing evidence of anti-tumor activity and RNAi proof of mechanism - important results for the entire RNAi therapeutics field. As reported this morning, we are encouraged by the continued progress of patients in this trial. Further, we advanced ALN-PCS towards the clinic with the filing of a CTA just last month - an important achievement as it is the first program using our second-generation lipid nanoparticle technology to enter clinical development," said Barry Greene, President and Chief Operating Officer of Alnylam. "We are looking forward to the second half of the year, where we now expect to report data from our ALN-TTR01 Phase I study in the fourth quarter, expect to file our ALN-TTR02 regulatory filings, and aim to report clinical activity data from our ALN-PCS Phase I study by year end."

Cash, Cash Equivalents and Total Marketable Securities

At June 30, 2011, Alnylam had cash, cash equivalents and total marketable securities of $316.0 million, as compared to $349.9 million at December 31, 2010.

Net Loss

The net loss according to accounting principles generally accepted in the U.S. (GAAP) for the second quarter of 2011 was $13.8 million, or $0.33 per share on both a basic and diluted basis (including $4.2 million, or $0.10 per share of non-cash stock-based compensation expense), as compared to a net loss of $14.6 million, or $0.35 per share on both a basic and diluted basis (including $5.1 million, or $0.12 per share of non-cash stock-based compensation expense), for the same period in the previous year.

Revenues

Revenues were $20.6 million for the second quarter of 2011, as compared to $26.6 million for the same period last year. Revenues for the second quarter of 2011 included $14.0 million of collaboration revenues related to the company's alliance with Roche, $5.5 million of revenues from the company's alliance with Takeda Pharmaceuticals Company Limited, and $1.1 million of expense reimbursement, amortization, and/or license fee revenues from Novartis, Cubist Pharmaceuticals, Inc., Biogen Idec Inc., and other sources.

Research and Development Expenses

Research and development (R&D) expenses were $25.3 million in the second quarter of 2011, which included $2.8 million of non-cash stock-based compensation, as compared to $28.1 million in the second quarter of 2010, which included $3.2 million of non-cash stock-based compensation. The decrease in R&D expenses in the second quarter of 2011 as compared to the prior year period was due primarily to lower external service expenses, including pre-clinical costs associated with the company's ALN-TTR and ALN-VSP programs.

General and Administrative Expenses

General and administrative (G&A) expenses were $8.4 million in the second quarter of 2011, which included $1.4 million of non-cash stock-based compensation, as compared to $10.1 million in the second quarter of 2010, which included $1.8 million of non-cash stock-based compensation. The decrease in G&A expenses for the second quarter of 2011 as compared to the prior year period was due primarily to a reduction in professional service fees related to business activities, primarily legal activities.

Regulus Therapeutics

Equity in loss of joint venture was $1.0 million and $3.9 million for the second quarter of 2011 and 2010, respectively, related to Alnylam's share of the net losses incurred by Regulus.

Interest Income

Interest income was $0.3 million for the second quarter of 2011, as compared to $0.6 million for the second quarter of 2010. The decrease in interest income was due primarily to lower average cash, cash equivalents and total marketable securities balances as compared to the prior year.

2011 Financial Guidance

Due to investments in the company's RNAi therapeutics pipeline, including its "Alnylam 5x15" programs, Alnylam now expects its cash, cash equivalents and total marketable securities balance will be greater than $250 million at December 31, 2011.

"Alnylam continues to maintain a strong balance sheet, ending the second quarter with approximately $316 million in cash," said Michael Mason, Vice President, Finance and Treasurer of Alnylam. "This strong financial profile enables us to invest in the advancement of our clinical pipeline, including both our 'Alnylam 5x15' programs as well as our partner-based programs. Given our progress to date in 2011, including four RNAi therapeutic programs now in clinical development, we have revised our financial guidance to end the year with greater than $250 million in cash."

Second Quarter 2011 and Recent Significant Corporate Highlights

"Alnylam 5x15" Program Highlights

• Filed Clinical Trial Application (CTA) for ALN-PCS. Alnylam filed a CTA with the Medicines and Healthcare products Regulatory Agency (MHRA) in the U.K. to initiate a Phase I clinical trial with ALN-PCS, an RNAi therapeutic for the treatment of severe hypercholesterolemia. Upon receiving clearance, Alnylam plans to initiate a Phase I clinical trial and expects to present initial safety, tolerability, and pharmacodynamic activity data from this study by the end of the year. ALN-PCS is an RNAi therapeutic that utilizes proprietary Alnylam second-generation lipid nanoparticle (LNP) technology, specifically using the MC3 lipid.
• Advanced ALN-TTR Program, Including Presentation of New Data at Peripheral Nerve Society Meeting; Updated Guidance. Alnylam reported new results from its ALN-TTR program at the 2011 Peripheral Nerve Society Meeting. These data were from a natural history study designed to measure blood levels of wild-type and mutant transthyretin (TTR) over time in both transthyretin-mediated amyloidosis (ATTR) patients and gene carriers. Results showed that TTR levels were stable over time in both patient groups. ALN-TTR01 is currently actively enrolling ATTR patients in a blinded, randomized, placebo-controlled, single dose escalation Phase I clinical trial. The company today is updating guidance and now expects to report on Phase I data from this study in the fourth quarter of 2011 in order to accommodate for patient enrollment over the summer months and presentation of data at a key scientific meeting. Specifically, the company expects to present data at the International Symposium on Familial Amyloidotic Polyneuropathy being held November 20 - 22, 2011 in Kumamoto, Japan. In parallel, Alnylam is also advancing ALN-TTR02, which utilizes proprietary Alnylam second-generation delivery technology, and believes it is on track to file an investigational new drug (IND) or IND equivalent application in the second half of 2011.
• Advanced Additional "Alnylam 5x15" Discovery Programs. The company continued to advance its additional "Alnylam 5x15" programs, including ALN-HPN, an RNAi therapeutic targeting the hepcidin pathway for the treatment of refractory anemia. In addition, Alnylam believes it is on track to advance two additional genetically defined target and/or disease programs in the third and fourth quarters of 2011, respectively, and has advanced several candidate programs in its discovery efforts accordingly.

Recent Partner Program Highlights

• Presented Results from ALN-VSP Phase I Clinical Trial at ASCO Meeting. Alnylam presented results from its Phase I clinical trial with ALN-VSP at the 2011 American Society of Clinical Oncology (ASCO) Annual Meeting. ALN-VSP is a systemically delivered RNAi therapeutic for the treatment of advanced solid tumors with liver involvement. In the Phase I study, ALN-VSP was generally well tolerated, demonstrated evidence for anti-tumor activity, and was found to mediate RNAi activity in both hepatic and extra-hepatic tumors. One patient with endometrial cancer experienced a partial response (PR) with 70% tumor regression. A dose of 1.0 mg/kg administered every two weeks was identified as a dose/dose regimen for further Phase II studies. Alnylam announced earlier today that it has completed treatment of patients in the Phase I study protocol, with patients continuing treatment in a separate extension study. A total of 41 patients were enrolled and treated, together receiving 209 doses of drug. Currently five patients with disease control, including the endometrial cancer patient with an ongoing PR, continue to receive ALN-VSP under the extension protocol; this also includes two patients with renal cancer and two patients with pancreatic neuroendocrine carcinoma. Alnylam expects to partner its ALN-VSP program prior to initiating a Phase II clinical study.
• Continued Enrollment in ALN-RSV01 Study. Alnylam continued enrollment in its Phase IIb study of ALN-RSV01, an RNAi therapeutic for the treatment of respiratory syncytial virus (RSV)-infected lung transplant patients. The company believes it is on track to report data from this study in 2012.
• Advanced Additional Partner Programs Including ALN-HTT. In collaboration with Medtronic Inc. and CHDI Foundation, Inc., Alnylam continues to advance ALN-HTT, an RNAi therapeutic targeting the huntingtin gene for the treatment of Huntington's Disease.

Business and Organizational Highlights

• Extended Delivery Research Collaboration with AlCana Technologies and The University of British Columbia, and Formed New Delivery Collaboration with Precision NanoSystems. Alnylam elected to extend its RNAi therapeutics research collaboration with AlCana Technologies, Inc. and The University of British Columbia (UBC) through July 2012. The research collaboration is focused on the discovery of novel cationic lipids, such as the MC3 lipid, employed in second-generation LNPs for the systemic delivery of RNAi therapeutics. The work is fully funded by Alnylam and conducted by scientists at UBC and AlCana. Under the terms of the research agreement, Alnylam retains exclusive rights to all new inventions in the RNAi field as well as sole rights to sublicense any resulting intellectual property to Alnylam's current and future partners. In a new and separate agreement, Alnylam formed an exclusive collaboration with Precision NanoSystems, Inc. focused on the discovery and development of novel LNPs, called small LNPs (sLNPs), using microfluidics technology. Based on their small particle size of approximately 20 nanometers, sLNPs have the potential for broadened biodistribution beyond the liver.
• Regulus Therapeutics and GlaxoSmithKline Named a Third microRNA Target. Regulus identified a third microRNA target in its alliance with GlaxoSmithKline (GSK), triggering a pre-clinical milestone payment from GSK. The Regulus-GSK alliance is focused on the discovery and development of compounds targeting four different microRNAs in inflammation and hepatitis C virus (HCV) infection.
• Filed Answer and Counterclaim to Tekmira Lawsuit. Alnylam has commented previously on its belief that the Tekmira complaint is without merit; the company intends to fully defend itself in this matter.
• Alnylam Announced Organizational Changes. Akshay K. Vaishnaw, M.D., Ph.D., has been promoted to the new position of Chief Medical Officer. Dr. Vaishnaw previously held the title of Senior Vice President, Clinical Research. Kenneth Koblan, Ph.D., former Chief Scientific Officer, left the company to return to a large pharmaceutical company.